Yahoo Finance The Biden administration will wipe out another batch of student loans in February 2024 — who’s in line for loan forgiveness?
Another year, another round of student loan forgiveness — whether the U.S. is sinking in national debt or not.
The Biden administration announced on Thursday it will wipe out a fresh batch of student loans — this time, targeting borrowers who took on small debts of $12,000 or less for college.
Don’t miss
Commercial real estate has outperformed the S&P 500 over 25 years. Here's how to diversify your portfolio without the headache of being a landlord
Rich young Americans have lost confidence in the stock market — and are betting on these 3 assets instead. Get in now for strong long-term tailwinds
Take control of your finances in 2024: 5 money moves to start the new year off strong
To qualify, borrowers must have made at least 10 years of repayments and be enrolled onto the government’s new Saving on a Valuable Education (SAVE) Plan.
“Borrowers enrolled in SAVE who are eligible for early forgiveness will have their debts canceled immediately starting next month, with no action on their part,” according to the Jan.11 statement by the Department of Education (DoE).
Helping community college borrowers
The majority of federal student loan borrowers in default originally borrowed $12,000 or less, according to the DoE.
In particular, this new wave of SAVE Plan relief — which is coming months ahead of schedule — is expected to help people who borrowed smaller amounts to attend community colleges. The DoE estimated the SAVE Plan will make 85% of future community college borrowers debt free within 10 years.
U.S. Under Secretary of Education, James Kvaal, said the action will “help struggling borrowers who have been making loan payments for years, including many who never graduated from college. Giving borrowers with smaller loans a faster path to being debt free will help many borrowers avoid financial distress and have peace of mind.”
Read more: Millions of Americans are in massive debt in the face of rising rates. Here's how to take a break from debt this month
The SAVE Plan
To help borrowers benefit from this debt relief, the Biden administration has launched an outreach and email campaign to encourage Americans to sign up for the SAVE Plan — especially those who may be eligible for immediate student loan forgiveness.
As of early January, 6.9 million borrowers were enrolled in the SAVE Plan, which U.S. Secretary of Education, Miguel Cardona, deemed “the most affordable student loan repayment plan ever available.”
Of SAVE enrollees, 3.9 million have a $0 payment — because they are single borrowers earning less than $32,800 per year or a family of four making less than $67,500 — while borrowers who owe a payment are saving an estimated $117 a month (just over $1,400 a year) compared to their previous REPAYE Plans.
“With lower monthly payments, protection from runaway interest, and faster timelines to debt forgiveness, President Biden’s SAVE plan is not only benefiting millions of current borrowers but also providing the students of today and tomorrow with a more affordable pathway to college degrees and credentials,” Cardona added.
What to read next
This Pennsylvania trio bought a $100K abandoned school and turned it into a 31-unit apartment building — how to invest in real estate without all the heavy lifting
Jeff Bezos and Oprah Winfrey invest in this asset to keep their wealth safe — you may want to do the same in 2024
The US dollar has lost 87% of its purchasing power since 1971: Learn how to diversify your portfolio by investing in the world’s most popular precious metal
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
